Budget must show what we are invested in

May 2, 2023
Prime Minister Anthony Albanese

In three weeks or so, a little after the second Labor budget, the Albanese government will mark its first year in office.

It is not just journalistic laziness which marks it as a convenient moment for some report cards, and reviews of how the government is travelling. In straight political terms, of course, it is travelling well but primarily because the coalition is travelling so badly – worse indeed than any party thrown into opposition after a few terms of government since WWII. The opposition’s failures may owe something to the government’s cunning, and what the opposition would insist is an inexplicable continuing honeymoon between Labor and the electorate. But Albanese’s favourable position owes something to his strategy and tactics, to a caution and aversion to risk taking that might be called timidity, and to a so-far-successful occupation of the centre ground of Australian politics. His southern pickets look forward and backward to ground once comfortably held by the Liberal Party. Their only fear is opposition artillery, from over the next hill.

Labor triumphalism is presumably accentuated by its occupation of the Treasury benches in all the mainland states and territories. In all but NSW and Queensland (and Tasmania, where Labor is not in government) the Liberal Party is in complete disarray, representatively and organisationally. Successive defeats have been shattering, and so far, the Liberals have found it very difficult to regroup. Although defeat in the states is not the fault of Peter Dutton, his position as the senior leader and symbol of the party has not been helping the regrouping process, either at state or federal level. He has made no effort to appease sections of the electorate which have turned decisively against the party. Some of his policy positions – his campaign on the Voice for example – may have pleased the tiny army of dyed-in-the-wool remnants, most of whom, as the pollsters point out, are aged Australian-born men of British stock, well-versed in political warfare and ardent reactionary opinions. But they are seriously out of touch with the views of women, of middle-aged professionals, of people born overseas, and younger women and men. Dutton may yearn to convert everyone to his own view – to the angry old Anglo-men view, but he’s getting no-where on his mission and never will. Dutton needs an achievement other than holding his party together.

Albanese’s mastery of Dutton might also seem to be illustrated by opinion polling suggesting that the prime minister, and Labor generally, are rated by the electorate as superior to the coalition in economic management skills, and on national security issues, traditionally areas in which the coalition has had the advantage. On the latter, moreover, it sometimes now appears that Dutton in opposition is doing exactly what Albanese, Penny Wong and Richard Marles did when they were in opposition – sticking so close to the then government’s positions that there was no effective difference in approach. Albanese has established that by adopting an approach to nuclear submarine acquisition along the lines sketched out by Scott Morrison and using just the same Morrison rationale. If there are dangers in the government’s approach – and I think there are – they will not be exposed by the opposition.

Labor is governing for those it won over at the election, not for its long-suffering and more needy base

But while admirers applaud not only the capture of the middle ground, but even the potential that the Labor umbrella might come to embrace the values, and the loyalties, of Liberal moderates, including, in the long run, the Teals, others are murmuring that these gains have been achieved by Labor governing as if it were a liberal party like Perrottet’s or Berejiklian’s, not the party of the workers. To win the election it made targeted, but limited, promises about childcare, reducing the cost of healthcare, including pharmaceuticals, and supporting cost-of-living pay increases for workers at the bottom of the heap. It also made some promises, more wide-ranging than the coalition, but otherwise limited in scope, on the environment and climate change action. It has largely honoured these promises, even if it was less successful in holding down energy prices, and has, so far, failed dismally with its promises of increasing public housing stock. It has blamed the latter on the refusal of the Greens and the crossbench to adopt its $10billion fund proposal, but critics are making headway with their criticism that the Labor scheme is mean-minded, unlikely to achieve the results claimed, including creating extra housing. Although rents and mortgages, land supply and new housing stock, and the freezing out of the younger half of the population from the housing market are key political issues over the next generation, Labor is so far playing it only for the politics, and without regard for good policy.

But it has denied any sort of urgent wider agenda in health, education and social welfare, insisting that the economic task of fighting inflation, paying off debts, and reducing the deficit is more urgent than re-mobilising the economy to face the needs of the 21st century. Albanese can talk up a nation which has gone back into manufacturing, or to reconciliation with Indigenous Australians. He has largely eschewed the vision thing, least of all as some sort of emotional force propelling the remaking of the economy, social and cultural relations, or Australia’s place in the world. Instead of an optimistic picture of a future involving some of the most blessed and most wealthy citizens of the earth, the Australian public is fed a pessimistic tale of gloom, of an Australia beset by more danger than it has faced since WWII, of an economy at risk from world trading recession and erratic behaviour by China, a society threatened, rather than energised, by technological change. The message seems to be that during these dangerous and troubled times, one should stick close to a nurturing, but necessarily stingy, mother. And, certainly, stay away from the others who have demonstrated a propensity for stealing everything that was not nailed down.

Treasurer Jim Chalmers may have made a persuasive case that the problem of fixing the economic fundamentals means that Labor must, for the moment, rein in its ambitions. He, at least, can freely and emotionally admit the opportunity cost, hinting that there is nothing that he would more like to do than to fix hospitals, GPs, public schools and universities, and the mean and punitive benefits going to the unemployed. He has even made a virtue of atoning for the sins of Julia Gillard, Jenny Macklin and Bill Shorten, in restoring cuts to single mothers – surely the worst political, economic and social decision of the Gillard era, as most of those who were involved now admit. His first Budget saw the Government putting money into paying off debt. During the lead-up to this year’s he has begun the spending on new defence projects, including the submarines, and money that might have gone into health or education will not be spent, but committed to debt repayment. All creating the idea of good stewardship, each a repudiation of the idea that Labor governments are profligate, and that they let spending get out of control. A lot more discipline than demonstrated by the Morrison government under Josh Frydenberg, and spent with more controls and to greater lasting effect.

Labor may be making hard calls. But they are not tough calls, evenly and equitably distributing the pain

During this Budget Chalmers is also expected to avoid promising to abolish the 2024 tax cuts, worth hundreds of billions, including for the very well off. That is money that could reform the crisis in Medicare transactions with GPs, and, at least for a few years, hold the budget line pending NDIS reform. Labor has its options open, and some have assumed that they have at all times intended to drop the tax cuts, (already legislated, and to take effect from July next year) at the May Budget just before they are due. Chalmers would have time to legislate more modest, but better distributed cuts. Suddenly, however, some are beginning to fear that Albanese will rate keeping public faith on retaining the tax cuts ahead of putting most of the money to better, more equitable use. It might be rated a masterstroke by readers of The Australian and the Financial Review, but it would be a difficult sell to those being asked to keep their belts tight during a period of necessary, but fairly distributed, pain. What some might call a hard, but hardly a tough call, whether on fairness grounds, or in support of a claim that the economy needs a big stimulus, particularly among the yacht-building classes. Perhaps as a recognition of the sacrifices they have had to make since the Morrison money-tap was cut off.

It is conventional wisdom that government make the tough decisions during the first year of government, use the second year to settle the changes down, and then use the political and financial credits they have earned (particularly as memories of hurtful changes fade) as election bait at the end of the third year. Jim Chalmers seems to be factoring it differently, unless he simply means to throw responsibility (by his own lights) out the window in 2025.

He wouldn’t be the first, even in recent memory, but it would not prevent a chorus of screams from the coalition and the Murdoch and Nine media about trying to destroy the economy.

But the narrative is wrong. It is all very well for Albanese to want to retain the loyalty of those who swung to Labor in 2022. But he would be sadly misreading Labor’s own base if he thought that technical fulfilment of his election promises in austere times was reward enough for them. Even more if he runs another austerity campaign focused on continuing sacrifice to reduce the debt crisis, as well as to build up our defences in case of conflict over China, or, perhaps, Ukraine.

It’s not that voters cannot, or will not, defer gratification. Bob Hawke and Paul Keating proved that in the 1980s, as they repeatedly won elections in which they had offered more blood, sweat and tears as the coalition mechanically offered tax cuts. The voters weren’t conned. But nor were they bribable. Keating and Hawke persuaded voters that it was necessary to make short-term sacrifices to remake the economy for different circumstances. They promised measures to make sure there was a safety net, as well as a social wage to make up for some of the pay increases they would have been looking for. The ACTU and employers were in on the deal, which included the beginning of modern mass superannuation.

The point is that Hawke and Keating were selling the deal. They were being frank. They briefed the media and the markets. They had already made major reforms to public administration to show that they were cutting back on self-indulgence, waste and mismanagement. They introduced more transparent and accountable systems – systems that continued until they were destroyed under the Morrison government, with all too pathetic resistance from the Finance department. There was a story to sell – and at least until we had the recession we had to have, or perhaps even then – the public bought it.

Albanese has no plan to change the economy or the nation. Nothing on his agenda, even a republic or the Voice, amounts to the reworking of the economy in the 2020s. But he wants his supporters – his old, long-suffering base, and even new cohorts of supporters – to defer their appetite for goods and services from government until the accounts are in better order, until the economy’s place in world trade is affirmed and secure, and until we can incorporate significantly higher levels of defence spending. He doesn’t need to be offering a quid pro quo in the way Paul Keating framed the proposition. What he needs is a coherent explanation of why, in his view, the austerity is necessary in the short term, and what positive forces he hopes will be released from the contraction.

Labor should be selling a well-thought-out program of what it means to do once it is time to press the accelerator. And the public should be in on its thinking

The obvious way is with traditional Labor strengths – social investment spending in health, in education and vocational training, in a system that provides dignity and a fair income for people in need, including an increasing aged population many of whom have never been welfare dependent during their working lives.

Labor might be devoting time to persuading people that change and improvements can only be incremental, able to be put in place only slowly even when the need is obvious. That does not mean that the government must simply mark time until, it says, the time is right. It could be an opportunity for a new politics of consultation and investigation of the best policies and programs. For substituting well-designed, well-costed and well-trialled programs for the mishmash of ad hoc policies largely prepared by inexpert suits in ministerial offices, usually more framed for election and marketing purposes than because it is well thought out policy. It could be a time in which a reformed bureaucracy is itself given time to devise policies and – just as importantly – to evaluate, to set standards by which effectiveness would be monitored, and keep under continuous critical review programs and policies already in place.

Such measures do not call for royal commissions – which are best focused, usually, on what has gone wrong in the past. They are not matters to be dealt with to prior specification by squads of expensive external consultants in ambiguous relationships with ministers and departmental secretaries, many of whom have hopes for post-separation jobs. (In my new ministerial, ministerial staffer and public service code of ethics, there will be a minimum ten-year ban on accepting work with any consultancy firm or contractor which has done work for the portfolio over the past five years. It will be known as the Christopher Pyne clause. There will also be an annual statement of any direct or indirect payments of public money, beyond ordinary parliamentary super entitlements, to any former minister.) Instead, ministers would announce reviews of policy, to be conducted by the department, and departments would be obliged not only to establish a consultation process, but to provide detailed comments on all submissions. Reports, and associated costings, would be published. It would, of course, be for government to decide whether they would follow advice, but they would normally respond to it in the same way that they would respond to a parliamentary committee report.

We do not necessarily want a government which has deferred or passed over all policy and activities to inquiries. Instead, the focus would be on a process of keeping all important policy under review, in a way that allows citizens, and ministers, to see the whole picture as well as the constituent parts. And it would also put pressure on public servants to improve their game with policy advice and with program management, since there could be a more continuous transparency over important programs. In theory Robodebt disasters should not be allowed to occur.

Albanese’s luck may endure, if only because the Liberal Party seems reluctant to dig itself out of its hole. Sooner or later, however, public confidence in the prime minister, and his government, is going to turn on the sense that the public understands what the prime minister is doing, where he is going, and what he means to do when he gets there. Perhaps I am too young at this game, but I must say that I don’t have a clue as to their guiding principle. And where I have a glimmer, I have little expectation of boldness, of purpose, or of effective concentration on the task at hand. For the moment, it may be enough to be not Scott Morrison. Or Peter Dutton. A day will come when it won’t be.

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